TMI Blog1996 (9) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... ocate (Ms. Aruna Banerjee and G.S. Chatterjee, Advocates, with him), for the appellants. B. Sen and T.A. Ramachandran, Senior Advocates (Dilip D. Krishan and J.R. Das, Advocates, with them), for the respondents. -------------------------------------------------- The judgment of the Court was delivered by K. VENKATASWAMI, J. -Common questions of law arise out of a common judgment of the West Bengal Taxation Tribunal dated April 26, 1990, rendered in RN-30(T), RN-31(T), RN-34(T), RN-103(T), RN-367(T), RN-138(T), RN-338 and RN-339 of 1989. The appellants are contractors and they execute civil construction works including construction of roads and bridges under different departments of the Central and State Governments as well as respective corporations. Such works include excavation of earth, drilling, construction of water channel and river bank protection. Such works of contract were not brought under the net of sales tax till the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as "the Act") was amended by the West Bengal Act 4 of 1984 inserting section 6D and amending section 2(c) of the Act. These amendments were pursuant to the 46th Amendme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., should not be included in the "contractual transfer price". Another minor point raised by the learned counsel was that the cost of freight and delivery for carrying goods to the worksite should not also be included in the "contractual transfer price". Mr. B. Sen, learned Senior Counsel in reply, submitted that none of the questions raised by the learned counsel for the appellants remain res integra as they are totally covered either by the decision of this Court in Builders Association case [1989] 73 STC 370; (1989) 2 SCC 645 or the recent decision of this Court in Gannon Dunkerley Co. v. State of Rajasthan [1993] 88 STC 204; (1993) 1 SCC 364. In addition to that he also invited our attention to a decision of this Court in the case of State of Madhya Pradesh v. Orient Paper Mills Ltd. [1977] 40 STC 603; (1977) 2 SCC 77 wherein this Court has held that "royalty" is a feudalistic euphemism for price. So far as the cost of freight and delivery for carrying the goods to the worksite is concerned, the learned counsel invited our attention to the judgment of the Tribunal wherein the Tribunal has not finally decided the issue, but has left open the same for decision with reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the contractual transfer price during any year again exceeds rupees two lakhs, be liable to pay from the first day of the year immediately following such year the tax at the rate specified in sub-section (3) of such part of his contractual transfer price as specified in sub-section (2). (2) The tax payable under sub-section (1) shall be levied on that part of contractual transfer price of a dealer during any period which remains after deducting therefrom his contractual transfer price during that period on,- (a) contractual transfer of goods referred to in section 14 of the Central Sales Tax Act, 1956 (74 of 1956), on a prior sale whereof in West Bengal due tax under this Act or under the West Bengal Sales Tax Act, 1954 (West Bengal Act IV of 1954), if such goods are notified for taxation under that Act, is shown to the satisfaction of the Commissioner to have been paid; (b) contractual transfer of goods, sales of which are declared tax-free under section 6; (c) contractual transfer of goods, sales of which are generally exempt from tax under sub-clause (vi) of clause (a) of sub-section (2) of section 5; (d) contractual transfer of goods, on the purchase of which tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t fail. The classification cannot be faulted on account of denial of the facility of use of declaration forms, because this class of dealers has been treated and dealt with on a different footing altogether and they are governed by almost a self- contained code envisaged in section 6D." As rightly pointed out by learned Senior Counsel for the respondents Mr. B. Sen, the recent decision of this Court in Gannon Dunkerley Co. v. State of Rajasthan [1993] 88 STC 204; (1993) 1 SCC 364 also supports the view taken by the Tribunal. This Court has observed as follows: "A question has been raised whether it is permissible for the State Legislature to levy tax on deemed sales falling within the ambit of article 366(29A)(b) by prescribing a uniform rate of tax for all goods involved in the execution of a works contract even though different rates of tax are prescribed for sale of such goods. The learned counsel for the contractors have urged that it would not be permissible to impose two different rates of tax in respect of sale of the same article, one rate when the article is sold separately and a different rate when there is deemed sale in connection with the execution of a works con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is a contract to the contrary in the case of a works contract the property in the goods used in the construction of a building passes to the owner of the land on which the building is constructed, when the goods or materials used are incorporated in the building. The contractor becomes liable to pay the sales tax ordinarily when the goods or materials are so used in the construction of the building and it is not necessary to wait till the final bill is prepared for the entire work." It is, therefore, clear that goods used in the execution of the works contract stand transferred from the contractor to the contractee at the time the goods are incorporated in the construction. It is also brought to our notice by the learned counsel for the respondents that the principle laid down by this Court in N.M. Goel Co. v. Sales Tax Officer [1989] 72 STC 368 squarely applies to the second point raised herein. While considering a similar issue, namely, whether there was sale of goods in view of the contract between the parties whereunder the custody and control of the goods remained with the P.W.D. and goods were only used in the construction under the contract, this Court held that "in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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